Post-Incorporation Compliances: Starting a company in India involves several steps, including obtaining the Certificate of Incorporation, applying for a PAN, and opening a bank account. However, incorporation is only the beginning. Once your company is incorporated, it’s crucial to stay compliant with the regulations outlined in the Companies Act, 2013. Non-compliance can result in hefty fines and penalties, so it’s essential to be aware of post-incorporation requirements. In this blog, we will explore key post-incorporation compliances that every company must follow, from statutory register maintenance to the appointment of an auditor.
1. Post-Incorporation Compliances Corporate Stationery
After incorporation, the company must acquire essential corporate stationery for official use and compliance purposes. These items include:
- Name Board: The company must display its name and registered office address outside every office or place where it conducts business.
- Company Seal: Though the Companies Amendment Act, 2015 removed the mandatory requirement for a company seal, many businesses still choose to have one for PAN applications and board resolutions related to bank account opening.
- Letterhead: The company must print its name and registered office address on all official documents, including letterheads, invoices, and notices. A company letterhead is also required when opening a bank account.
- Share Certificates: Within two months of incorporation, the company must issue share certificates to all subscribers. Subscribers are required to deposit the agreed share capital into the company’s bank account, and in return, they will receive share certificates.
- Statutory Register: Every company must maintain a statutory register that includes a list of members, directors, debentures, and other shareholder and management-related information. This register must be updated regularly and kept at the registered office.
2. Applying for Company PAN
A Permanent Account Number (PAN) is a mandatory requirement for any company. The PAN serves as the identity for tax-related filings and compliance. The PAN application can be completed online, and after submission, the acknowledgment form must be signed and sent to the NSDL office for processing. The acknowledgment copy can also be used to open the company’s bank account.
3. Opening a Bank Account
Opening a bank account is one of the primary activities post-incorporation. Since the company is recognized as a legal entity, it needs a separate bank account for all transactions. To open a current account, the following documents are typically required:
- Self-attested copies of the Certificate of Incorporation and Memorandum & Articles of Association
- Board resolution authorizing the opening of the bank account
- Power of Attorney (if applicable)
- PAN allotment letter
- Copy of a telephone bill
The bank account should be opened within 180 days of incorporation, and the share capital deposited within the same period.
4. Appointment of an Auditor
According to Section 139 of the Companies Act, 2013, the Board of Directors must appoint the company’s first auditor within 30 days of incorporation. If the Board fails to appoint an auditor, an extraordinary general meeting (EGM) must be held within 90 days to make the appointment. The first auditor holds office until the conclusion of the company’s first Annual General Meeting (AGM).
5. Declaration of Commencement of Business
As per the Companies (Amendment) Ordinance, 2018, every company must file a declaration of the commencement of business within 180 days of incorporation. This is done by submitting Form INC-20A to the Registrar of Companies. Failure to do so may result in penalties and restrictions on business activities.
6. GST Registration
GST registration is mandatory for businesses with an annual turnover exceeding ₹40 lakhs (or ₹20 lakhs for service providers). While it may not be immediately necessary, it is advisable to apply for GST registration proactively if your business deals with large corporations or expects to scale quickly.
7. Maintenance of Statutory Registers
Maintaining statutory registers is a mandatory requirement for private limited companies. These registers should be kept at the company’s registered office and updated regularly. Key statutory registers include:
- Register of Members
- Register of Debenture Holders
- Index of Members and Debenture Holders
- Register of Beneficial Owners
- Register of Renewed and Duplicate Share Certificates
8. Additional Compliance Requirements
Along with the major compliance requirements, the company must also ensure the following:
- First Board Meeting: This must be held within 30 days of incorporation.
- Company Name Board: As mentioned earlier, the company name and registered office address must be displayed outside all business premises.
- Disclosure of Interest: Directors must disclose their interest in other entities, if any, to the Board.
- Books of Accounts: Proper books of accounts must be maintained from the very beginning.
- Shop Act Registration: Depending on the nature of the business, the company may need to register under the local Shops and Establishment Act.
- Professional Tax (PT) Registration: Companies may need to register for professional tax, depending on the state laws.
- Trademark Registration: Optional but recommended, trademark registration helps protect your brand name and logo.
Conclusion
Staying compliant with post-incorporation requirements is crucial for the smooth functioning of your company. By following the above checklist, you can ensure that your company is on the right track to maintaining compliance with the Companies Act, 2013. Regular updates, timely filings, and professional guidance can help avoid penalties and foster business growth. Always seek legal and financial advice if you are unsure about any of the requirements.
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